Chapter 7 - EXTERNAL AUDIT Flashcards
What companies are exempt from audit?
microentity
small company
subsidiary company
dormant company
Does an audit contain any assessment on a company’s current or future viability?
NO
Which documents and records are auditors entitled to have access to?
ALL
What type of individual or firm cannot be appointed as a company’s auditor?
An officer or employee of the company or an officer or employee of a connected undertaking, any person or firm that has a business relationship with the company
How many consecutive years can an auditor be appointed to a Public Interest Entity (PIE)?
Ten years plus an additional 10 years if a tender has been carried out
What does audit partner rotation guard against?
Threat to auditor objectivity and independence
Do all companies need to change their audit firm regularly?
No, only Public Interest Entities (PIE)
Who is the audit report prepared for?
The members
Is the audit process expected to uncover all errors or fraud?
No – only material errors and omissions
What does a Co Sec generally provide to an auditor on request?
copies of the minutes of meetings of directors, committees of the directors and members
review and obtain a director’s signature
on the auditor’s formal engagement letter
provide details of any related parties
complete directors’ remuneration disclosures
Why are non-audit services such as tax services, payroll, HR bookkeeping and other operational activities prohibited?
They affect audit independence
Who makes the first appointment of the auditor?
The Directors
What is a PIE (public Interest Entity)?
A PIE is defined in CA2006 s. 519A as a company, which meets at least one of the following criteria:
* an issuer with any transferable securities admitted to trading on a regulated market;
* a credit institution; or
* an insurance undertaking.
Must all public companies appoint auditors?
YES, except dormant companies
Who approves auditor remuneration?
The Directors
